Occasional Thoughts and Observations From My Career as a Financial Professional

Main menu

Post navigation

How Much Is It Worth? Uh… What? And to Whom?

Many business owners are thinking it may be time for a change. And everyone has a different set of concerns.

– Do you really want the hassle of doing it all over again through the next business cycle?
– Is there enough cash to retire or move on to the next venture?
– Do you need cash now, or can you take it over time?
– Do you want to get out from under the personal guarantees?
– Continuity of the business.
– Welfare of managers and employees.
– Do you want to have an ongoing management role?

What Are You Selling?

Assets – You can sell off assets, pay off debt, and keep the difference. Selling to an opportunistic buyer would be quicker, but the price will be lower in the amount of their profit.

An Ongoing Business – Solid, predictable cash flows can be multiplied at an appropriate rate to calculate a selling price, and to set a time horizon.

A Business Plan – If it is already under way, you may be able to use projected cash flows to increase the selling price.

Your Wisdom and Expertise – This could justify an ongoing management or consulting role.

Who’s Buying?

Nobody – An orderly shut-down and sale of assets.

Financiers – Maybe, but only if the price is really, really right.

Employees or Family Members – They have a stake in continuing the business. This could take several years to accomplish.

Someone in the Industry – Someone who has an interest in entering or expanding in your market.

Each of these situations will have a very different value and personal outcome for yourself and your family.

Does your CFO have the knowledge and experience to advise you on a business exit strategy?